Cannabis has been legalized in many states but remains illegal at the federal level (Robyn Beck)

Los Angeles (AFP) – A US couple who operated a lucrative marijuana business in the western state of Colorado are in hot water with federal authorities for failing to pay the taxman more than $3 million.

According to authorities, Andrew Poarch and his wife Shuntay opened “Lazy Lion,” a cash-only marijuana club, in Colorado Springs in January 2013 — earning more than $10 million over three years.

But the couple failed to properly declare their income during that period and even claimed they were due a refund in 2014 because they had earned just $19,292 — when in fact their income stood at nearly $3 million, officials say.

Poarch pleaded guilty in the case last week, prosecutors announced Wednesday, and charges are pending against his wife.

The case illustrates the tax pitfalls of owning a cannabis business in the United States, where the drug has been legalized in many states but remains illegal at the federal level.

That has translated to a cash-only marijuana industry as business owners are unable to deposit the money they earn into banks, which refuse to open accounts for cannabis-related businesses.

According to the charge sheet against Poarch and his wife, Lazy Lion obtained its supply of cannabis from a series of grow operations that they controlled.

Their customers could purchase the marijuana at the club and consume it on the premises.

Authorities determined the scale of the business by reviewing records from a sale program the couple, both aged 31, used to record all transactions.

Poarch is to be sentenced in the case in May and faces up to three years in prison and a $250,000 fine.

He has also agreed to pay tax authorities a little over $3 million in restitution, according to his plea deal.

Disclaimer: This story is published from a syndicated feed. Siliconeer does not assume any liability for the above story. Validity of the above story is for 7 Days from original date of publishing. Content copyright AFP.